AAbbssttrraacctt ffrroomm tthhee RReeppoorrtt ooff aann IInntteerrddiisscciipplliinnaarryy

SSttuuddyy on

SSppaaccee TToouurriissmm iinn IInnddiiaa

**********

AA CCoollllaabboorraattiivvee PPrroojjeecctt ooff

IInnssttiittuuttee ooff AAiirr aanndd SSppaaccee LLaaww,, MMccGGiillll UUnniivveerrssiittyy

MMoonnttrreeaall,, CCaannaaddaa

&

UUnniivveerrssiittyy ooff PPeettrroolleeuumm && EEnneerrggyy SSttuuddiieess

DDeehhrraadduunn,, IInnddiiaa

EEXXEECCUUTTIIVVEE SSUUMMMMAARRYY

Is Space tourism industry commercially viable in India? This question can be has been answered

by conducting a careful analysis of business potential of space tourism and forecasting the

expected revenue and estimating the investment costs for developing space tourism, and its

financial implications is analyzed. The fact that tourism for space travel has not been established is

mostly due to the high cost of manned space flights and lack of versatile space transportation

facilities. Therefore, alternative, less expensive and reliable space transportation systems concepts

is identified. Once space tourism is safe and affordable to the broad public, space tourism

activities, especially manned space programs, will develop and increase in a way which may be

beyond the present day imagination. In this report we have analyzed various impediments to this

venture being influenced by economic, legal and policy considerations.

This project for the first in India, undertakes a study about the potential of and possible

operations of space tourism industry in India from an interdisciplinary perspective covering

business, technical and regulatory aspects of this newly emerging industry. This report is a

preliminary appraisal of the technological, financial, marketing, safety, infrastructural, and legal

requirements for the initiation of space transportation industry in India. Focused on the transport

of tourists the report analyzes in detail the conditions that should be put in place to foster and

sustain this industry. It describes the existing challenges and discusses possible options for

overcoming these. The report includes an in-depth look at the feasibility of Space transportation

from the perspective of cost, technology development, and the possibility of growth. The

conclusions are synthesized into a series of recommendations for the space tourism in India to go

forth and prosper.

RREESSEEAARRCCHH TTEEAAMM

Chief Mentor Dr. Parag Diwan, Vice Chancellor, UPES

Project Leader-Principal Investigator Prof. Dr. Ram Jakhu, IASL, McGill University

Research Supervisor Prof. K.C. Gandhi, UPES

Faculty from ASE Dr. Om Prakash, UPES

Faculty from Law Prof. A.C. Kher, UPES

Research Coordinator Ms. Chetna Phutela, UPES

Research Coordinator Ms. Kshama Nargund, IASL, McGill University

Research Assistant: Business Mr. Mukesh Mohan Pandey, UPES

Research Assistant: Business Mr. Awanish P. Singh, UPES

Research Assistant: Business Mr. Vikramjit Nath, UPES

Research Assistant: Engineering Ms. Disha Ahluwalia, UPES

Research Assistant: Engineering Mr. Abhijit Kumar, UPES

Research Assistant: Law Ms. Aparijita Sharma, UPES

Research Assistant: Law Mr. Sumit Kishore, UPES

External Advisors

External Advisor Mr. Derek Webber, Spaceport Associates, Washington,

DC, the U.S.

External Advisor Dr. Olga Zhdanovich, European Space Agency, the

Netherlands

External Advisor Mr. K. R. Sridhara Murthi, Antrix, ISRO, India

Editor

Ms. Diane Howard, IASL, McGill University

OOVVEERRVVIIEEWW

1. NNeeeedd aanndd SSiiggnniiffiiccaannccee ooff tthhiiss SSttuuddyy:: Irrespective of the current financial crisis around the

world, the fact remains that the world economy has grown during the past decade and so is

the case of India. In several countries significant developments have already taken place in

the area of space tourism. It is believed that with the upcoming economic and technological

development, space tourism might also generate interest in India. With the enough surpluses

available in India and rapidly increasing middle and upper classes, a new space tourism

industry (or a sub-sector of the existing adventure travel industry) may be expected to evolve.

During this new travel, travellers can enjoy the thrill and adventure of the high ground and

microgravity environment in outer space. It is timely to determine in an objective manner the

needed investment and market, infrastructure and regulatory regime for this newest industry

to evolve in India.

2. MMiissssiioonn SSttaatteemmeenntt:: ―Identification and discussion of business, technical, regulatory and

policy issues with respect to the potential for, and possible operation of, space tourism

industry in India‖.

3. SSccooppee ooff SSttuuddyy:: Transportation to venture into outer space which is beyond the gravitational

pull of Earth and to have experience of weightlessness of space is meant for space tourism.

During the last several years a lot of productive work has been done in this field yet this

concept appears to be futuristic. But there are positive indications that a space tourism

industry is emerging in the world. The important segments of a space tourism are market the

passengers, the space travel service operators and agencies that is supply and the

infrastructure providers and manufacturers (facilities).These factors are significantly influenced

by secondary factors such as organization, financing, legal and policy considerations, etc.

These factors are discussed in this Study with a view to achieve the above-mentioned mission

of this interdisciplinary collaborative project.

4. WWhhaatt iiss SSppaaccee TToouurriissmm??:: Space tourism encapsulates the notion that passengers will have

the opportunity to travel beyond Earth's atmosphere and experience orbital flights, prolonged

stays in rotating space hotels and may participate in research, entertainment and even sport.

However, it is important to emphasize that this concept will necessitate a paradigm shift in

how space is perceived, constituting not only the journey but also forming the destination.

Space tourism for a literal understanding of the term may be split into two words, space and

tourism.

55.. SSppaaccee:: Space has been defined in many dictionaries as:

―A boundless three-dimensional extent in which objects and events occur and has relative

position and direction.‖ (Merriam-Webster dictionary)

―The infinite extension of the three-dimensional region in which all matter exists.‖ (Free

dictionary.com)

―The empty area outside the Earth’s atmosphere, where the planets and the stars are.‖

(Cambridge Dictionaries).

The word space invigorates the enthusiasm in any curious individual towards the darkness of

the universe, not literally but, one tries to see the light beyond this darkness. Curiosity gets

the better of us. With all due respect to the people who believe in the saying curiosity kills, it’s

after all curiosity that got mankind reach the heights it has. Space exploration, aerodynamics,

technology, communication, satellites, orbits and the list goes on-and-on are all attributed to

curiosity and enthusiasm for aviation and space exploration.

Space is a term that can refer to various phenomena in science, mathematics, and

communications. In astronomy and cosmology, space is the vast three dimensional regions

that begin where the Earth's atmosphere ends. Space is usually thought to begin at the lowest

altitude at which satellites can maintain orbits for a reasonable time without falling into the

atmosphere. This is approximately 100 kilometres (60 miles) above the surface of the Earth.

Although the frontier between the atmosphere and space is not officially defined, it is

generally accepted that space begins at about 100 km from the surface of the Earth.

Astronomers may speak of interplanetary space (the space between planets in our solar

system), interstellar space (the space between stars in our galaxy), or intergalactic space (the

space between galaxies in the universe). Some scientists believe that space extends infinitely

far in all directions, while others believe that space is finite but unbounded, just as the 2-

space surface of the Earth has finite area yet no beginning nor end.

6. TToouurriissmm:: Tourism derivates from the word ―tour‖ which means a journey in a circuit, 1where

the most essential word is circuit which signifies a return journey to the origin point. Tourism

is travel for recreational, leisure or business purposes. The World Tourism Organization

defines tourists as people who "travel to and stay in places outside their usual environment

for more than twenty-four (24) hours and not more than one consecutive year for leisure,

business and other purposes not related to the exercise of an activity remunerated from

within the place visited".2 Tourism has become a popular global leisure activity. In 2007, there

were over 903 million international tourist arrivals, with a growth of 6.6% as compared to

2006. International tourist receipts were US$ 856 billion in 2007 in India.3

The first terrestrial vehicle penetrated the orbit surrounding Earth in 1957, yet since this time

space has remained strictly within the domain of national governments and professional

astronauts. Over the course of human history there has always been a strong drive to explore

and travel to new and exciting places. Space exploration has captured the imagination of the

general public for the last over 50 years; it is only natural that people are now beginning to

ask if and when they too might venture into space. Space and tourism have both developed

at an equally rapid pace, and the potential of both together is definitely going to grow

further. Although human spaceflight is currently the privilege of a few space-exploring

nations, recent advances in space technology and entrepreneurship are about to change the

status quo. China, with the assistance of Russian technology, was able to place an astronaut in

space in 2003 in a fraction of the time that it took other space powers, such as the USA and

USSR, to do this. The first credible private space-tourist venture is already a reality. The first

space tourist, Mr. Denis Tito, took the first trip to the space as a tourist in 2001 in a

government vehicle and his flight was privately funded.

Thus, ―space tourism: connotes a provision of services for humans to access and experience

space for adventure and recreation and ―space tourist‖ is a person who travels to and

experiences space for adventure and recreation (also space traveller, space client, space

passenger).

Essentially space tourism can be divided into two categories: i.e. suborbital and orbital.

66..11 SSuubboorrbbiittaall TToouurriissmm

As the word suggests, suborbital flight, is a flight short of orbit altitude. Currently priced

at around US$ 100,000 a suborbital flight would take a tourist to an altitude of about

100 Km above the Earth on a trajectories path, at the peak of which one would

experience zero gravity and can see the Earth’s curvature and the hollow black space

around. The spacecraft will probably shut off its engines well before reaching maximum

altitude, and then coast up to its highest point. The suborbital flight requires a training

of about a week.4 On return from the suborbital flight the tourist would be awarded

with an ―astronaut’s wing‖. Technically an ―astronaut’s wing‖ is awarded to those who

have reached an altitude of 100 km (60 miles) or more.

66..22 OOrrbbiittaall TToouurriissmm

A vertical launch to the orbit on a Russian made Soyuz rocket or a reusable launch

vehicle (RLV), attached to it like the space shuttle Columbia, where one would dock into

the International Space Station (ISS) and stay there for a week or more. So far only a

handful of tourists have been to the ISS paying a price of about US$ 20 Million. The

orbital experience is totally different from that of suborbital in the sense that one would

experience zero gravity throughout the stay, orbit the Earth and see the sunrise every

90 Minutes. Eat and live like astronauts do and tell about the uniqueness of the trip to

the world. But the flight does not come with its own requirements in terms of health

and fitness. Flying to space requires a high level of fitness due to the amount of stress

on the body due to the absence of gravity. The orbital trip would require from one

person to undergo a rigorous training for about 6 months so as to acclimatize with zero

gravity living, manoeuvring and also some operational functions and controls in the ISS.

MMAARRKKEETT

Understanding of the potential markets and demand is the key to examining the development of

space tourism. If there is no demand, a market cannot be developed, then there is little or no

reason for operators or developers of the necessary technology and facilities to invest the huge

capital required for such an endeavour. Starting with brief estimates of global market for space

tourism, this Chapter provides an overview of potential demand for space tourism in India. It also

provides the forecast of each type travel i.e. for suborbital and orbital travel. The methodology

adopted to arrive at each forecast is also discussed in details.

Suborbital demand forecast methodology: A survey was undertaken to obtain an accurate

portrayal of the current market for space travel in India. This survey comprises of fifteen-year

forecast of market demand. The results of the survey are significant elements in the forecasts

for public space travel. The survey results were used with additional data and analysis to

determine the number of passengers per year for the next fifteen years for suborbital space

travel

Estimating the potential market for suborbital travel in India

The suborbital travel forecast on the potential pool of customers for the service. Although a

great portion of the general population may be interested in suborbital travel, the price tag

prevents many from becoming viable customers for this service. To extrapolate the forecast

from the results of the survey for suborbital travel, the number of high-net- worth

individuals—those people with at least US$ 1 million of disposable income using publicly

available data from the 2009 Annual Wealth Report published by Merrill Lynch/Cap Gemini. It

is assumed that one qualifying individual is equal to one household and the attitudinal and

behavioural component of respondent towards space travel remains constant over period of

time.

The potential market is narrowed to a target market for suborbital space travel by applying

limiting factors, such as interest in suborbital travel, willingness to pay current prices, reasons

for interest in space flight and physical fitness. Specifically, the interests were measured

based on individuals who responded ―definitely" and ―very likely" to questions pertaining to

participation in suborbital space travel, after having been presented with both the positive

and less attractive aspects of suborbital flight. Their responses were then analyzed in addition

to their responses to the range of suborbital price points given in the survey. Overall, this

analysis revealed that although 24.67% of respondents were interested in space tourism trip

after hearing the flipside description of travel, yet none of the survey respondents were

willing to pay the current price for a suborbital trip. However, if this price is reduced to US$

150,000, 3.3% of sampled individuals are willing to go for suborbital trip. If this price is further

reduced to US$ 100,000 it is found that 11.33% are willing to go for a suborbital trip.

Meanwhile according to McKinsey Global Institute the number of household in the millionaire

category will continue growing at compounded annual growth rate of 10.89% till 2025.

Therefore, we have compounded our baseline potential customer with the same rate.

Thereafter we applied these percentages to the baseline potential customer to arrive at a

baseline demand for suborbital space travel from 2010 to 2025 assuming the attitudinal and

behavioural pattern of potential customer to be constant throughout.

FFAACCIILLIITTIIEESS,, IINNFFRRAASSTTRRUUCCTTUURREE AANNDD HHUUMMAANN RREESSOOUURRCCEESS RREEQQUUIIRREEDD

The facilities, infrastructure and human resources required for a viable space transportation

network are a significant part of the challenge facing the development of this industry. Key

considerations are the requirements of a safe transportation system (vehicle), appropriate

spaceports and other related ground infrastructure, development of suitable air and space

traffic management systems, and the impact of these elements on other areas of human

activity and on the environment. This Chapter will discuss these issues and present the

challenges, some potential solutions, and conditions that must be met if the industry is to be

viable.

Vehicles for space tourism: There are various developments on the technological front in

space tourism. Numerous companies are venturing into this field and investing capital. Some

of the major names in this field are Virgin Galactic, Bristol Space planes, Rocket plane, XCOR

Aerospace, Space X, and Blue Origin. Also government organizations like the JRS and EADS

are building space vehicles.

SSAAFFEETTYY,, LLIIAABBIILLIITTYY AANNDD IINNSSUURRAANNCCEE

Safety and reliability are of paramount importance to any transportation industry, but for space

transportation they may become the defining issues of the industry’s success or failure. Space

flight is seen as a risky endeavour, and the space shuttles Challenger and Columbia tragedies

reinforced the association of space with danger in the minds of a public that will not distinguish

between orbital and suborbital flight. In this Chapter safety issues in space flight has been

discussed. Meanwhile in case of occurrence of any odd accident, various liability issues are also

discussed along with role of insurance companies to promote space transportation.

Safety issues in space flight: Outer space is a dangerous place. Humans are not fully suitable to

live in space. When in space, a human is subjected to radiation exposure far greater than he gets

on Earth, the lack of gravity causes bloating and loss of bone mass and many people become

disoriented. There is no air in space, so people need to carry air with them. But, that means that

they also are in danger from leaks in their spacecraft, leaks caused by impacts, etc. And, if

something goes wrong with their air handling system, they may suffocate and eventually die.

Then, there are dangers involved in even getting to space. Space is a long way up, so high

accelerations are needed to get there within any reasonable time, and the human body is not

suitable for such forces. Moreover, there are problems in returning from space primarily due to

strong forces on human body resulting from the interaction of Earth’s atmosphere on the

spacecraft.

A spacecraft in orbit moves so fast that atmospheric heat is generated upon re-entry so much

that it can damage or destroy the spacecraft unless some heat-shield is used, and if nothing goes

wrong. This is evident from the loss of two space shuttles, the Challenger being destroyed on

launch, and the Columbia destroyed upon re-entry. The Challenger was torn apart by

atmospheric forces when it was shocked by the explosion of its external fuel tank after hot gasses

leaked from one of its external fuel tanks. The Columbia was lost when atmospheric forces ripped

it apart after structural failure due to burn through resulting from damage to its heat protecting

tiles. The Soviet Union also lost cosmonauts in space re-entry and landing failures.

RREEGGUULLAATTOORRYY RREEQQUUIIRREEMMEENNTTSS AANNDD CCOOMMPPLLIIAANNCCEE

Legal and political considerations are fundamental to the establishment of any emerging industry.

Without governmental support and the appropriate regulatory regime and organisation (body or

authority), even the most innovative of ideas rarely develop to commercial levels, particularly

those involving new technology or risky activity. This Chapter aims to assess the role government

can play in starting or stimulating the development of space tourism and assess how this industry

can get to start a new space travel venture in India.

FFUUTTUURREE CCHHAALLLLEENNGGEESS

It is still too early to get a comprehensive picture of space tourism in India. There are still

many roadblocks which emerge when we make a business plan for such venture. In this

chapter we have tried to identify few of them and discuss those impediments which

would come when we think to offer space transportation system.

Availability of appropriate space vehicles: The definition of a space tourism vehicle is

one that can safely transport passengers to an altitude higher than 100 km. This is

believed to the altitude at which space begins, meaning the passengers can experience

weightlessness; receive astronaut wings as commercial space-flight participants. However,

in the United States, the altitude required to receive the commercial astronaut wings is

only 80 km. Currently, the space tourism industry is in the preliminary stage of

developing vehicles capable of transporting passengers into suborbital flight. There is

no fully developed, confidently safe and dedicated spacecraft to offer space travel. This

creates a haze to look into the space tourism sector.

FFIINNDDIINNGGSS AANNDD RREECCOOMMMMEENNDDAATTIIOONNSS

Number of tourists: Through the survey conducted by us we came to know that demand

for suborbital trip in India will spurt from 4191 suborbital tourists in 2013 and will grow to

become 49749 tourists in 2025. If we fulfil all suborbital travel demand expected revenue

generation from the same would be US$ 629 million in 2013 and will grow to become

US$ 4975 million in 2025.

Meanwhile the keeping in view the supply side constraint expected demand in India for

orbital travel through Soyuz flight will be 2 tourists in 2010 and will grow to become 8

tourists in 2025 and revenue realized from it will be US$ 40 million in 2010 and will grow

to become US$ 160 million.

However the revenue forecasts are based on hardcore operation of space-flight. Various

ancillary revenue sources like theme and virtual reality space parks; space camps; training,

production and launch recovery facilities parks, trip training facilities, and other such

public quasi-entertainment facilities has been ignored in the revenue forecast as in

aviation the ancillary revenue happens to be most important for sustenance of company

similarly in space travel to estimation of secondary revenue source could give a very

promising picture.

Besides that in order to lure private investment government should give tax benefit,

subsidy for research and development in this sector initially as this sector would generate

a new source of employment as well as enhancing India’s global credibility as a high-tech

fast developing nation.

Cost: To start up a business venture to cater the need of suborbital trip an organization

would incur US$ 350 million for design, development; testing, evaluation and production

of five spaceships, however regulatory and lease charge will be US$ 32.2 million. The

operating cost per passenger will be US$ 90,000 and marketing of the same will cost US$

1.35 million. Therefore it’s viable for a business venture to successfully run this business

however low IRR of 2% shows low return on investment to this project.

Similarly in orbital travel we have three estimates of cost: optimistic, most likely and

pessimistic; for a hypothetical company offering orbital travel, of these estimates we find

that a business venture having the optimistic cost estimate would have IRR of 45% which

is really a very attractive project to invest into, however if organization has most likely or

pessimistic cost estimate it will have negative IRR. To conclude we can state that at this

stage it is risky to invest in such business venture.

Target market: Space travel is affordable only by affluent segment of society. People

having their discretionary net-worth greater than US$ 1 million can afford such type of

travels. Therefore we have surveyed to find out interests of these individuals. In the

analysis from survey input we found that male are more likely to have interest in such

type of travel than female 123. Therefore we must target male high net-worth individuals.

Since nearly two-third of our sample who fulfil the criteria of US$ 1 million are from age

group of 50-70. Therefore this age group can be our target customers.

If we analyze the time of launching we find that demand for orbital travel is present in

India as per our survey response we identified that at least two tourists are expected for

orbital travel through Soyuz flight and marketing for such type of travel can be done in

India. Meanwhile we also found that if more flights for orbital travel are operated by

private ventures we have identified that orbital travel is more attractive to our target

respondents.

However for suborbital travel we find that respondents who are interested in such type of

travel are more price-sensitive. Hence our forecast demand for such travel spurts in 2013

when the price is assumed to come down to US$ 1,500,000. Thus we can find that orbital

travel is more luring to Indian high net-worth individuals than suborbital travel at present.

However extensive advertising can further improve the demand scenario for suborbital

travel.

Type of vehicle and location planning: From the technical analysis report we infer that

horizontal take-off and horizontal landing (HTHL) is more appropriate for suborbital

travel and it has been found that vehicle like Spaceship Two is feasible technically as well

as commercially. As there are 335 unused airports in India and some of them can be

converted into spaceports after considering their feasibility.

However for orbital travel vertical take-off and landing is appropriate. In India Sriharikota

launch centre can be developed to facilitate vertical take-off and landing for such type of

travel.

To offer space travel from India there is three options available: (a) let the existing foreign

operator provide the service; (b) an Indian company operates with foreign built vehicles;

and (c) a possibility of developing a vehicle in India may be independently or through

Joint venture.

Option b and c can only be executed when the regulatory impediments are smoothened.

For this purpose a strong lobby must be created which would satisfy the political heads

that this would be economically, socially and internationally beneficial for the country. It

would be a close battle between the benefits and risks involved in the business and in

order to bring in the requisite laws the benefits have to overpower the risks.

Safety, liability for injury and damage, and insurance: Liability rules are among the

most fundamental concerns with respect to commercial activity because all parties must

be aware of what their obligations, rights and remedies are before engaging in any

activity.

Liability refers to an activity where proof of damages as result of activity is enough for

culpability and there is no need to establish the fault.

The level of liability can be classified as limited or unlimited, which refers to the existence

or otherwise of a cap on the amount of damages that can be paid.

State liability refers to compensation by the launching state for breach of its international

obligation vis-à-vis liability of private entities for compensation.

An ideal liability regime for injury and damage applicable to suborbital transportation

vehicles carrying passengers, cargo has to account for different situations viz. damage

caused by the collisions, damages to third parties on the Earth's surface and damage

caused to passengers.

The producer of the vehicle and other products has to design a safe product,

manufacture safe product and warn against dangers of using of the product. Otherwise, it

could lead to product liability, which refers to the duty that a manufacturer has to ensure

that he delivers a reasonably safe product.

There must be in place appropriate regulatory procedures, including the mandatory

requirement of sufficient insurance coverage, in order to minimise liability risks and to

encourage new ventures in the space tourism industry.

Private parties undertaking space tourism activities: The private parties (other than

Government bodies) can be entrusted with different activities in connection with space

tourism.

The role of the Government in the establishment of a new industry is to help its private

sector to develop and encourage the growth of domestic economies.

Though Government role includes legal responsibility for authorizing and supervising

private space activities, the space industry has yet to grow commercially.

Incidentally the prices per ticket for trips in space would largely be dependent on

efficiencies of private industry and continued progress with technology development.

Insurance of travellers to space: Risk associated with commercial space flights are likely

to be covered by insurers/reinsurers, when space vehicle designs are finalized and

become operational.

Space tourist or passengers, referred to as a Space Flight Participant in the U.S., and

might not waive their right to sue the spaceflight operator. The spaceflight operator may

insist or request the spaceflight participant to agree to a waiver of liability as part of the

space flight agreement. But in the event of an accident where the space flight participant

is killed or injured, such waivers might be challenged.

Steps to be taken by the Government to develop space tourism in India: India has

become one of the major space powers in the world, particularly after the successful

launch of the Chandrayaan –I

Indian space sector is being opened up for private participants and has begun

commercializing certain technologies and services internationally.

In India, the privatization and commercialization of space technologies make it imperative

for the Government to legislate appropriate national space laws and regulations and to

mandate the Director General of Civil Aviation to encourage and regulate space tourism.

The Indian Institute of Space Technology, Thiruvananthapuram in Kerala inaugurated in

2007 can be expected to assist in developing the appropriate human resources and

critical space technologies for the future.